AI Adoption, Externalities, and Digital Sovereignty
Abstract: We develop a tractable model of technology adoption in which firms benefit from productivity gains while generating labor displacement and non-market externalities. A regulator designs a technology tax to align private and social incentives. We show that laissez-faire leads to excessive adoption, whereas a Pigouvian tax decentralizes the socially optimal level. Worker responses, primarily through skill upgrading and retraining, shape both equilibrium outcomes and policy effectiveness. Extensions highlight how regulatory oversight, funded by tax revenues, can mitigate damages and promote optimal adoption. The framework provides a tractable setting to study technology policy in environments characterized by uncertainty, distributional tensions, and scale-dependent risks.
Authenticity-Driven Motivations in Oligopoly: Efforts, Pricing, and Welfare, with Aggey Semenov
Abstract: We develop an oligopoly theory of brand authenticity as an identity-based attribute valued by only a subset of consumers. Firms choose prices and costly efforts, while managers may derive private authenticity benefits from being perceived as intrinsically motivated. Heterogeneity in consumer preferences and managerial motivations jointly determines the equilibrium levels of authenticity provision, pricing, and consumer sorting. Firms led by more authenticity-driven managers invest more and, under standard complementarity conditions, charge price premia. Authenticity is privately unsustainable when the attentive audience is small, viable when it is large, and fragile at intermediate sizes. In this fragile region, laissez-faire equilibrium exhibits inefficient exit despite socially valuable participation, reflecting an extensive-margin inefficiency that can be addressed by participation support or third-party certification that raises perceived authenticity.
Vote Counting Dynamics and a Real-Time Test to Identify Fraud: Presidential Elections in the U.S., Peru, and Bolivia, with Diego Escobari and Gary Hoover
Abstract: Electoral fraud undermines democratic integrity, erodes public trust, stifles economic growth, and fuels political instability. This paper proposes a real-time fraud-detection strategy that leverages the temporal dynamics of vote counting. We develop a theoretical model of strategic fraud during sequential reporting in which incumbents leverage rising heterogeneity and extended timing in late batches to produce explosive surges that mirror patterns observed in disputed elections. Our proposed time-series test to identify fraud reveals strong momentum effects in vote trajectories. Unlike traditional static methods, our approach operates in real time without prior knowledge of when fraud may occur, enabling timely interventions by observers. Monte Carlo simulations verify that our test controls the size under the null and achieves superior power, outperforming a leading method previously employed in the literature. Using data from high-stakes presidential elections, we find no evidence of fraud in the U.S. or Peru, aligning with independent audits, but robust statistical anomalies in Bolivia, corroborating OAS findings. By bridging theory, simulations, and empirics, this study equips democracies with a tool to safeguard electoral processes and foster accountable governance in an era of heightened polarization.
Systemic Exposures vs. Facility Vulnerabilities: Policy Efficiency, Ownership, and Mortality in U.S. Nursing Homes, with Roland Pongou, Ghislain Junior Sidie, and Guy Tchuente
Abstract: Ownership differences in health care outcomes have long drawn attention, especially during crises. In the U.S. long-term care sector, it is well established that for-profit (FP) nursing homes experienced higher COVID-19 mortality than not-for-profit (NFP) facilities. Yet the sources of this disparity remain limited. What is the relative importance of systemic versus facility-level factors in explaining this gap? Using data from more than 11,000 nursing homes across 40 states, we confirm that FP facilities had mortality rates 19 percent above the mean relative to NFP providers, with the gap widening under more effective public health interventions. Structural decomposition results show that most of the disparity reflects systemic exposures, including staff-sharing networks, community disadvantage, and policy environments, rather than ownership alone. Quantitatively, observable characteristics account for virtually the entire mortality differential, with systemic factors accounting for the majority of the gap, leaving no residual ownership effect after accounting for exposures and facility attributes. Our findings suggest that policies addressing systemic vulnerabilities, including staffing resilience and local risk exposure, are more likely to reduce mortality gaps than policies targeting only ownership status.
Rationing to Avoid Conflict: A Centralized Assignment Problem, with Zephirin Nganmeni, Roland Pongou, and Bertrand Tchantcho
Abstract: When can a leader allocate scarce resources without triggering conflict from excluded groups? We study this question in a centralized assignment problem in which a conflict-averse leader allocates indivisible resources under an influence structure that determines which coalitions can block outcomes. We characterize when stable assignments exist, identify the minimum resource level required to guarantee stability, and determine how resources are allocated when stability is feasible. Our main result is that the relationship between resource availability and stability is non-monotonic: stable allocations may arise under extreme scarcity and abundance, yet fail at intermediate levels. The exact thresholds governing these regimes depend entirely on the underlying influence structure. The model provides a framework for studying conflict avoidance in environments such as political appointments, land allocation, public procurement, and aid distribution.
Cross-policy Effects: Lockdown Stringency, Race, and COVID-19 Vaccine in U.S. Nursing Homes, with Roland Pongou, Ghislain Junior Sidie, and Guy Tchuente, AEA Papers and Proceedings, 115: 457-461
The Reciprocity Set, with Roland Pongou, Journal of Mathematical Economics, 102980, 1 - 15
Justice, Inclusion, and Incentives [Open Access], with Ghislain H Demeze-Jouatsa and Roland Pongou, Journal of Theoretical Politics, 36(2), 101-131
Robust Contracts in Common Agency, with Keler Marku, and Sergio Ocampo, The Rand Journal of Economics, 55(2), 199 - 229
Laissez-faire, Social Networks, and Race in a Pandemic, with Roland Pongou, and Guy Tchuente, AEA Papers and Proceedings, 112:325-29
Supermajority Politics: Equilibrium Range, Policy Diversity, Utilitarian Welfare, and Political Compromise, with Aseem K. Mahajan, and Roland Pongou, European Journal of Operational Research, 307 (2), 963-974
A Non-Parametric Approach to Testing the Axioms of the Shapley Value with Limited Data, with Victor Aguiar and Roland Pongou, Games and Economic Behavior, 111, 41-63
Optimal Interventions in Networks during a Pandemic [Open Access], with Guy Tchuente and Roland Pongou, Journal of Population Economics, 36 (2), 847-883
Valuing Inputs Under Supply Uncertainty: The Bayesian Shapley Value, with Roland Pongou, Games and Economic Behavior, 108, 206-224
Vaccine and Inclusion, with Zephirin Nganmeni, Roland Pongou, and Bertrand Tchantcho, Journal of Public Economic Theory, 24 (5), 1101-1123
Overconfidence and Welfare in a Differentiated Duopoly, Managerial and Decision Economics, 43(3), 751-767
An Index of Unfairness, with Victor Aguiar, Roland Pongou, and Roberto Serrano, in Handbook of the Shapley Value, E. Algava et al. (eds.), CRC Press Taylor and Francis, pp. 31-48
On the Dynamic Analysis of Cournot-Bertrand Equilibria, with Aggey Semenov, Economics Letters, 183 (108549), 1-5
Growth at the Border: Recent Investment and Job Creation in the Rio Grande Valley, with Francisco Aldape, Maroula Khraiche and Andre V. Mollick, CBESt Border and Business Briefs, 22 (2), 1-9
Occupations, Wages and Artificial Intelligence in the Rio Grande Valley, with Maroula Khraiche and Elisa Taveras, CBESt Border and Business Briefs, 22 (1), 1-7
Private School Vouchers in Texas: Past experience and future consequences, with Maroula Khraiche and Elisa Taveras, CBESt Border and Business Briefs, 21 (2), 1-6
The use (and misuse) of tariffs in North America: A new trade war? , with Maroula Khraiche and Armando Lopez-Velasco, CBESt Border and Business Briefs, 20 (1), 1-7